TBO TEK IPO Review – GMP, Finance, etc.
TBO TEK IPO Review: TBO TEK is facing an IPO issue of Rs. 1,550.81 Cr will commence on May 8, 2024. The offering closes on May 10 and will be listed on the exchange on May 15, 2024. The company plans to issue fresh shares worth ₹400 Cr and the remaining ₹1,150.81 Cr will be an offer for sale. (OFS). In this article, we analyze GMP, financials, strengths and weaknesses of TBO TEK IPO Review 2024. Read on to find out!
TBO TEK IPO Review – About Us
TBO TEK is one of the leading travel distribution platforms in the global travel and tourism industry, operating in over 100 countries. We provide buyers with a comprehensive travel list as per their needs and support a wide range of currencies along with foreign exchange support.
The company simplifies the travel business for providers such as travel advisors, hotels, airlines, car rentals, transfers, cruises, insurance, rail, and more. For the end consumer, the buyer, it is an integrated, multi-currency, multi-language one-stop solution that helps them discover and book travel to destinations around the world.
TBO’s two-sided technology platform allows suppliers (hotels and other travel agencies) and buyers (end customers) to transact seamlessly with each other. This allows a large, fragmented supplier base to display and sell inventory and set prices to a large, fragmented global buyer base.
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As of FY23, TBO was processing an average of more than 41,000 bookings per day through its platform, with more than 7,500 destinations sold in more than 100 countries. The average number of bookings received through TBO jumped from 13,396 in FY21 to 41,218 in FY23. This increased the total transaction value from Rs. 3085 Cr in FY22 to Rs. 19,024 Cr in FY23.
TBO TEK IPO Review – Industry Intelligence
Over the past 100 years, the travel and tourism industry has transformed from a simple point-to-point travel solution to an ecosystem that caters to both business (“B2B”) and individual travelers (“B2C”), serving diverse customer needs and preferences across the entire travel journey. .
In 2017, the global travel and tourism market was worth US$1.7 trillion. The travel and tourism industry will recover to reach US$1.9 trillion in 2023, up 18.2% from 2022, and is expected to grow at a CAGR of 8.2% in 2023. By 2027, it will reach $2.6 trillion. Emerging economies, led by China and India, are driving this growth.
According to World Data Lab, India and China are expected to add more than 500 million new consumers by 2030 (representing 55% of the global total). Indian passport issuing agencies issued more than 12.9 million passports in 2022, compared to 8.5 million in 2021, according to India’s Ministry of External Affairs.
According to the United Nations World Tourism Organization (UNWTO), 135 more countries welcomed more than 1 million international tourists annually in 2019, compared to about 110 in 2010. .
Due to the COVID-19 pandemic, only a few countries saw more than 1 million international arrivals in 2020-2021, while 82 countries saw more than 1 million international arrivals in 2022.
Suppliers such as hotels, experience providers, and rental car companies can expect to serve customers in a growing number of countries. Likewise, travel buyers can expect to serve a growing base of travelers who are willing to spend more on travel and are constantly seeking out new travel destinations.
TBO TEK IPO Review – Financial Highlights
TBO TEK reported revenue of Rs. 1086 Cr in FY23, up 34% from Rs. 512 Cr in FY22. The company’s revenue has surged from a measly Rs. 177Cr in FY21, a CAGR of 148%. The acquisition of Buca Bed is cited as the reason behind this high growth.
The company turned profitable in FY22, reporting a net profit of Rs. 34Cr. In FY23, net profit increased 4.4 times to an all-time high of Rs. 148Cr. The ability to maintain and slightly increase higher revenues and margins has allowed TBO to effectively expand its bottom line.
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TBO TEK IPO Review – Key Players
Since the company is a pioneer in its field of business, you will not find any direct associates with the company. However, RateGain, a similar SaaS company in the travel and hospitality sector, could be considered a September low. Other listed companies include Travel CTM and Webjet Ltd.
Compared to RateGain, TBO TEK has twice the size of revenue, but its net worth is only half the size of RateGain. However, due to its high equity base, rate gains are underperforming with a return on equity of only 10% compared to 44% for TBO.
The company RateGain was listed on the exchange on December 17, 2021 at a price of Rs. 340. As of May 3, 2024, the stock price has almost doubled, reaching a price of Rs. 674 and has a price-to-earnings ratio of 144x. Compared to its peers, TBO is offered at a higher issue price of Rs. 920 and basic income of Rs. 14.21 is issued at a PER of 64 times.
Company Strengths
- Double-sided technology platform: TBO’s platform creates network effects through an interconnected flywheel that enhances the value proposition for partners.
- Scalability: The company has built a proprietary, modular and scalable platform that allows it to add new business lines, markets and travel products.
- Ability to create large datasets: The company has built its own platform that generates large amounts of data, storing data related to searches, reservations, invoices, and payments. This data can be used to gain insights into consumer behavior and make business decisions accordingly.
- Capital efficient business model: The company has developed an asset-light business model that can be easily expanded without additional investment. This will allow the company to maintain its EBITDA margins and expand its scale in the coming years.
- Weapon Growth: On March 31, 2022, we acquired Europe-based Bookabed, a B2B accommodation provider serving the UK and Ireland markets. The company will continue to make acquisitions that can help strengthen its platform.
company’s weaknesses
- Sector-specific risks: Revenues from TBO are significantly driven by hotel and ancillary bookings, which contributed 68% of revenue in FY23.
- Dependency on suppliers: TBO’s entire business relies on a limited range of suppliers with whom it has long-standing relationships. The company is also exposed to pricing pressures set by its suppliers.
- Technology dependence: The Company uses proprietary technologies for critical functions of its business. If we fail to maintain these systems or upgrade them appropriately in a timely manner, disruptions may adversely affect our business operations.
- Cases of government authorities against promoters: TBO’s joint managing directors received a show-cause notice from the Enforcement Directorate. Certain non-compliance may result in regulatory action or penalties.
- Highly competitive industries: TBO operates in a highly competitive industry where competition from other peers, whether in terms of distribution networks or market demand and supply integration, can impact its profits.
TBO TEK Limited IPO Review – GMP
Shares of TBO TEK were trading at a premium of 43.48% in the gray market on May 3, 2024. The stock in Gray Market was trading at Rs 1320. This gives a premium of Rs 400 per share to the ceiling price of Rs 920.
TBO TEK IPO Review – Key IPO Information
promoter: Ankush Nijhawan, Gaurav Bhatnagar, Manish Dhingra, Arjun Nijhawan and LAP Travel Pvt Ltd
Book Operations Lead Manager: Axis Capital Ltd, Goldman Sachs (India) Securities Ltd, Jefferies India Pvt Ltd and JM Financial Ltd
Proposal registered by: KFin technology company
purpose of the problem
- The Rs 135 Cr will be utilized to further strengthen the company’s technology and data solutions.
- Rs 100 Cr will be used to invest in Tek Travel, the company’s material subsidiary, for onboarding platform users through marketing and promotional activities.
- Rs 25 Cr will be used to invest in sales, marketing and infrastructure to support the organization’s growth plans.
- 40 units will be reserved for arms expansion through acquisition of Rs.
- The remaining amount will be utilized for general corporate purposes.
conclusion
TBO TEK is a leading travel distribution platform operating in over 100 countries. The company has shown impressive growth over the past two years, with sales growing at a compound annual growth rate (CAGR) of 148% and posting a profit in FY22. IPO proceeds will be used to enhance technology, user acquisition, marketing and potential acquisitions.
TBO has strengths such as a scalable two-sided platform, data-driven insights, and a capital-efficient model, but it also has its own strengths, including sector concentration of hotels and amenities, dependence on suppliers and technology, regulatory issues for promoters, and competition.
With an issue price of Rs. 920, valuing the company at a P/E of 64x (based on FY23 earnings), the IPO appears reasonably priced compared to peer RateGain (which trades at 144x P/E). However, investors should carefully evaluate the risks and opportunities before subscribing to an IPO.
Written by Nasir Hussein
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